2006 (12) TMI 559 - SC - Indian Laws

Suit for specific performance of contract - Prayer for impleadment to contest the suit and to permit them to file written statement - transfer pendente lite - HELD THAT - The principles specified in Section 52 of the T.P. Act are in accordance with equity, good conscience or justice because they rest upon an equitable and just foundation that it will be impossible to bring an action or suit to a successful termination if alienations are permitted to prevail. A transferee pendente lite is bound by the decree just as much as he was a party to the suit. The principle of lis pendens embodied in Section 52 of the T.P. Act being a principle of public policy, no question of good faith or bona fide arises. The principle underlying Section 52 is that a litigating party is exempted from taking notice of a title acquired during the pendency of the litigation. The mere pendency of a suit does not prevent one of the parties from dealing with the property constituting the subject matter of the suit. The Section only postulates a condition that the alienation will in no manner affect the rights of the other party under any decree which may be passed in the suit unless the property was alienated with the permission of the Court. Thus, the High Court's view is clearly indefensible and is set aside. Learned counsel for the respondents submitted that since they are not parties in the suit, their interest will get jeopardized. It is a trite law that if a person is not a party to a suit, the decree does not affect him unless the judgment is in rem and not in personem. Appeal deserves to be allowed which we direct.

Summary

Issues involved:
Challenge to the order allowing application under Order I Rule 10 CPC for impleadment during the pendency of a suit.

Detailed Analysis:

Issue 1: Application under Order I Rule 10 CPC for impleadment
The appeal challenged the order passed by a Single Judge of the Jharkhand High Court allowing an application under Order I Rule 10 CPC for impleadment by transferees of the property in dispute during the suit's pendency. The background facts revealed that the respondents filed the application to contest the suit and file a written statement. The trial court rejected the prayer for impleadment, citing Section 52 of the Transfer of Property Act, 1882 (TP Act), which prohibits transfer of property during the pendency of a suit without the court's permission. The High Court allowed the writ petition, emphasizing the need to add the respondents' vendors as parties to safeguard their interests.

Issue 2: Interpretation of Section 52 of the TP Act
The respondents argued that the High Court rightly interfered, citing the impact of Section 52 of the TP Act on the case. However, the appellant contended that the respondents, as transferees pendente lite without court leave, cannot seek impleadment as a matter of right. Reference was made to the case law highlighting that the transfer of property during litigation without court authorization is hit by the doctrine of lis pendens under Section 52, making the respondents unnecessary parties to the suit.

Issue 3: Legal principles and precedents
The judgment referred to legal principles and precedents to support the decision. It highlighted that a transferee pendente lite is bound by the decree as if a party to the suit, emphasizing the equitable foundation of Section 52 to prevent prejudice to litigating parties. The judgment distinguished cases where devolution of interest during a suit does not obligate the new party to seek leave to continue the suit, but they are bound by the proceedings. The court reiterated that the principle of lis pendens is based on public policy, ensuring that alienations during litigation do not affect the rights under any decree.

Conclusion:
The Supreme Court set aside the High Court's decision, emphasizing that the respondents, not being parties to the suit, are not automatically affected by the decree. The judgment reiterated the principles of Section 52 of the TP Act, stating that the mere pendency of a suit restricts property alienation without court permission to protect the rights of all parties involved. The appeal was allowed without costs, emphasizing the importance of legal principles in such cases.